THE Securities and Exchange Commission (SEC) has exempted micro enterprises from submitting audited financial statements, a move aimed at easing compliance and reducing regulatory burdens on small businesses.
Under Memorandum Circular 4, Series of 2026, stock and nonstock corporations with total assets or liabilities not exceeding P3 million may now submit certified financial statements instead of audited ones. Previously, only corporations with assets or liabilities below P600,000 were exempt.
SEC Chairman Francis Lim said the reform recognized the realities faced by micro enterprises, which often operate with very limited resources.
“By allowing the submission of certified financial statements in lieu of audited ones, we are making compliance more proportionate, allowing them to redirect their resources to growing their business,” he said.
“At the same time, the new threshold preserves accountability by requiring management to formally assume responsibility for the accuracy and integrity of their financial statements, ensuring that regulatory oversight remains firmly in place,” Lim added.
The exemption applies to financial statements covering fiscal years ending on or after Dec. 31, 2025.
Corporations below the audit threshold must submit a statement of management’s responsibility, signed under oath by key officers who assume full responsibility for the accuracy and truthfulness of the financial statements.
Incomplete, inaccurate, false or misleading statements will be subject to penalties under the Securities Regulation Code and the Revised Corporation Code.
The commission may also require audited statements if necessary for investor protection, regulatory enforcement or public interest.
The new threshold does not apply to corporations classified under Groups A, B or C, which include entities with significant public interest.
Group A covers public companies or those with at least P50 million worth of assets and 200 or more holders with at least 100 shares each, issuers of securities listed on an exchange, stock and securities exchanges, and other self-regulatory organizations.
Group B includes issuers of registered timeshares, proprietary and nonproprietary membership certificates, investment houses, brokers and dealers, government securities eligible dealers and universal banks registered as underwriters of securities.
Group C, meanwhile, consists of financing companies with assets over P10 million, lending firms with assets over P5 million, transfer agents and nonstock, nonprofit corporations, including foundations, that solicit or receive annual donations or contributions or have a fund balance exceeding P25 million.
The SEC said the measure balanced regulatory oversight with practical support for micro enterprises, making compliance more proportionate without compromising transparency.
